Air Transport World

Cracks in the mirrors. (transactions between Texas Air Corp. and Eastern Airlines) (editorial)

It came as no surprise to most people who had followed events at Eastern Airlines since it was purchased by Texas Air Corp. in 1986: Bankruptcy Court Examiner David Shapiro found that there were reasonable grounds to claim that numerous transactions between TAC and Eastern were improperly handled to the detriment of Eastern. Many of the deals that Shapiro cited as potentially unfair to Eastern have been discussed and questioned-in these pages and elsewhere.

In his study, Shapiro examined 15 transactions between the companies. Grounds for court action included the fact that Eastern did not receive fair value for its SystemOne CRS; the management and fuel-purchase fees that Texas Air charged Eastern were excessive; Eastern gates and aircraft were undervalued when they were sold to Continental; Eastern's contribution of $61 million toward its own purchase by Texas Air was questionable. …

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